Consumer Financial Protection Bureau (CFPB) Enforcement
Director Eric Halperin highlighted the bureau’s recent achievements and ongoing
efforts to protect consumers in the financial industry, during a speech at the National
Compliance Law Center’s (NCLC) Consumer Rights Litigation Conference.
The director emphasized the importance of the agency’s
mission and the positive impact it has had on the consumer marketplace, despite
challenges to the agency’s statutory authority, constitutionality and funding
structure.
The CFPB returned nearly $19 billion to almost 200 million
consumers through enforcement actions and monetary penalties over the past two
years, Halperin noted. He pointed to the bureau’s efforts to combat illegal
junk fees, which disproportionately affect communities of color and
lower-income individuals, putting them at greater risk of falling into debt
cycles. He described junk fees as “unnecessary, unavoidable, or surprise
charges that inflate prices while providing little to no benefit to the
consumer.”
“Illegal junk fees affect all Americans, but, as the
bureau’s research has found, their harmful effects disproportionately hit
communities of color,” Halperin said in prepared remarks. “And our research has
confirmed that, for many lower-income Americans, these fees can put them on a
treadmill of debt.
“In the Office of Enforcement, we’ve taken action against
some of the nation’s largest banks for the imposition of these fees. That
includes Wells Fargo and Regions Bank, for, among other things, charging
customers surprise overdraft fees over the course of many years; as well as
Bank of America, for charging multiple non-sufficient funds fees for the same
transaction.”
Halperin emphasized the importance of focusing on large
market actors whose conduct affected a significant number of consumers, as well
as individual and corporate accountability. To help in this respect, he said
the CFPB plans to bolster its resources by hiring additional staff and working
closely with state and federal government partners to ensure maximum consumer
protection. This will entail securing meaningful injunctive relief, addressing
the use of opaque algorithms and automated decision-making tools, and continuing
to focus on predatory lending and abusive practices targeting financially
vulnerable consumers.
“While I am proud of what we’ve accomplished, I want to
emphasize: we have much more to do. Consumer debt burdens are
historically high, and they are rising,” Halperin said. “High interest rates
strain the balance sheets of families across the country, making it harder to
buy a car or a home or take out a line of credit. And at the same time, the
consumer economy continues to get more complex and less transparent every day.
At the CFPB, we are committed to ensuring that crucial consumer protection
standards keep up with the ever-more complicated technology and automation that
we see creeping into the world of consumer finance.”
The CFPB’s recent guidance on emerging technology, such as
artificial intelligence and machine learning, spelled out stipulations
requiring companies to be transparent when using automation in credit decisions
and other processes involved in loan origination and servicing. Garris Horn
Senior Partner John Levonick told Dodd Frank Update the guidance
could serve as a roadmap for companies to implement emerging technologies in a
safe and compliant way. But it also serves as a basis for holding companies
accountable for doing so improperly.
“We understand that we have a lot more work ahead of us, and
so we are concentrating our resources on addressing what we see as the biggest
sources of consumer harm,” Halperin said. “This includes focusing on the
largest market actors, whose conduct affects significant numbers of consumers.
“That means seeking meaningful injunctive relief in addition
to redress and penalties, and being prepared to litigate, if necessary, to
secure this relief. Such conduct relief includes product line limitations, as
in our actions on surprise overdraft fees; bans on specific activities, as in
our action against the PGX companies; and industry bans. It also includes the
imposition of measures for holding companies accountable for future compliance,
as in our action against TitleMax, where the bureau has required the company to
report compliance findings directly to the company’s chief officers.”
Halperin asserted the CFPB’s mission is to create a level
playing field for consumers in the financial marketplace and empower
individuals to exercise their agency. He addressed risks associated with the “surveillance
economy,” highlighting issues related to the accuracy of consumer data and its
impact on housing, employment and credit access. The director also discussed
the role of credit reporting agencies and their obligations to ensure the
accuracy of consumer data, especially at a time when costs are particularly
high for consumers seeking housing and other large expenses dependent on credit
access.
“[W]e settled with one of the ‘Big Three,’ TransUnion,
in an action that illustrates the role the credit reporting agencies play in
the most fundamental aspects of consumers’ lives,” Halperin said. “Together
with the Federal Trade Commission, we took action against the company for
failing to ensure the rental background checks that landlords use to make
rental decisions were accurate, and for withholding information renters needed
to correct inaccurate information. An unfair denial of rental housing has
effects beyond just the loss of rental application fees—it may mean losing out
on the opportunity to live in a person’s preferred neighborhood, the
neighborhood that makes sense for them in terms of schools, work, and more; and
it may mean having to pay even more for housing down the line, given fewer
choices in the market.”
Predatory lending and abusive practices will continue to be
core concern for the CFPB, as it aims to protect consumers from debt traps,
misleading financing arrangements and predatory targeting, highlighting various
enforcement actions against companies found to have engaged in deceptive
practices and violated consumer protection laws.
In closing, the director acknowledged and appreciated the
hard work of individuals and organizations fighting on behalf of consumers to
make the American economy more inclusive and equitable, ensuring that it
benefited not only those with financial means but also the most vulnerable
individuals.